2013 -- S 0666

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LC01305

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO INSURANCE

     Introduced By: Senator David E. Bates

     Date Introduced: March 06, 2013

     Referred To: Senate Corporations

It is enacted by the General Assembly as follows:

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     SECTION 1. Chapter 27-4 of the General Laws entitled "Life Insurance Policies and

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Reserves" is hereby amended by adding thereto the following section:

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     27-4-30. Discretionary clauses. -- (a) No policy or certificate may contain a provision:

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     (1) Purporting to reserve sole discretion to the insurance company to interpret the terms

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of a policy or certificate; or

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     (2) Specifying a standard of review upon which a court may review denial of a claim or

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any other decision made by an insurance company with respect to a policyholder or certificate

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holder.

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     SECTION 2. Title 27 of the General Laws entitled "INSURANCE" is hereby amended

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by adding thereto the following chapter:

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     CHAPTER 8.2

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STOP-LOSS INSURANCE

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     27-8.2-1. Purpose and intent. -- This chapter shall be known as the "Stop-Loss

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Insurance Act." The purpose of this chapter is to establish criteria for the issuance of stop-loss

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insurance policies. Nothing in this chapter shall be construed as imposing any requirement or

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duty on any person other than an insurer, or as treating any stop-loss policy as a direct policy of

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health insurance.

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     27-8.2-2. Definitions. -- (a) "Actuarial certification" means a written statement by a

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member of the American Academy of Actuaries, or other individual acceptable to the

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commissioner, that an insurer is in compliance with the provisions of this chapter. The written

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statement shall be based upon the individual’s examination, and include a review of the

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appropriate records and the actuarial assumptions and methods used by the insurer in establishing

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attachment points and other applicable determinations in conjunction with the provision of stop-

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loss insurance coverage.

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     (b) "Attachment point" means the claims amount incurred by an insured group beyond

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which the insurer incurs a liability for payment.

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     (c)"Expected claims" means the amount of claims that, in the absence of a stop-loss

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policy or other insurance, are projected to be incurred by an insured group through its health plan.

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     27-8.2-3. Stop-loss insurance coverage standards. -- (a) An insurer shall not issue a

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stop-loss insurance policy that:

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     (1) Has an annual attachment point for claims incurred per individual that is lower than

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sixty thousand dollars ($60,000);

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     (2) Has an annual aggregate attachment point, for groups of fifty (50) or fewer, that is

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lower than the greater of:

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     (i) Fifteen thousand dollars ($15,000) times the number of group members;

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     (ii) One hundred thirty percent (130%) of expected claims; or

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     (iii) Twenty thousand dollars ($20,000);

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     (3) Has an annual aggregate attachment point for groups of fifty-one (51) or more that is

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lower than one hundred ten percent (110%) of expected claims; or

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     (4) Provides direct coverage of health care expenses of an individual.

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     (b) An insurer shall determine the number of persons in a group, for the purposes of this

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subsection, on a consistent basis, at least annually.

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     (c) For the purposes of determining the dollar amounts set forth in subsection (a) above,

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and upon consideration of the medical components of the Consumer Price Index (CPI), the

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commissioner may amend these dollar amounts and shall publish any change in these dollar

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amounts at least six (6) months prior to their effective dates.

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     (d) The commissioner may adopt rules that carry out the requirements of this chapter and

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prescribe additional standards for stop-loss insurance policies.

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     27-8.2-4. Actuarial certification. -- An insurer shall file with the commissioner annually

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on or before March 15, an actuarial certification certifying that the insurer is in compliance with

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this chapter. The certification shall be in a form and manner, and shall contain information,

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specified by the commissioner. A copy of the certification shall be retained by the insurer at its

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principal place of business.

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     27-8.2-5. Effective date. -- This chapter shall become effective with respect to stop-loss

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insurance policies issued or renewed on or after January 1, 2014.

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     SECTION 3. Chapter 27-18 of the General Laws entitled "Accident and Sickness

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Insurance Policies" is hereby amended by adding thereto the following section:

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     27-18-79. Discretionary clauses. -- (a) No policy or certificate issued by a health care

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entity may contain a provision:

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     (1) Purporting to reserve sole discretion to the insurance company to interpret the terms

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of a policy or certificate; or

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     (2) Specifying a standard of review upon which a court may review denial of a claim or

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any other decision made by an insurance company with respect to a policyholder or certificate

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holder.

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     (b) For purposes of this section, "health care entity" means a health insurance company or

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nonprofit hospital or medical or dental service corporation or plan or health maintenance

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organization which operates or administers a health plan in this state.

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     SECTION 4. Chapter 27-34.2 of the General Laws entitled "Long-Term Care Insurance"

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is hereby amended by adding thereto the following section:

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     27-34.2-22. Discretionary clauses. -- No policy or certificate may contain a provision:

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     (1) Purporting to reserve sole discretion to the insurance company to interpret the terms

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of a policy or certificate; or

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     (2) Specifying a standard of review upon which a court may review denial of a claim or

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any other decision made by an insurance company with respect to a policyholder or certificate

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holder.

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     SECTION 5. This act shall take effect upon passage.

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LC01305

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO INSURANCE

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     This act would impose standards on stop-loss insurance policies, which cap an

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employer’s exposure with regard to liability under health benefit plans issued to employees. This

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act would prohibit discretionary clauses, which allow insurers to make unilateral coverage

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decisions, in health, life and long-term care insurance policies.

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     This act would take effect upon passage.

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LC01305

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